Question 1

The ceteris paribus assumption is always used whenever an economist analyzes the relationship of two variables.

Accepted Answer

A) True 
 B)False

Question 2

Using gasoline prices as an example, explain what a normative statement is and what a positive statement is.

Accepted Answer

Valid positive statements would include

Question 3

The ceteris paribus assumption is used in economics

Accepted Answer

A)  because economic theory is an accurate reflection of the real world. 
B)  to isolate the important variables when formulating a theory. 
C)  primarily to identify unstable equilibrium situations. 
D)  to make the theory more complicated 
E)  to distinguish economics from other disciplines. 
A)  because economic theory is an accurate reflection of the real world. 
B)  to isolate the important variables when formulating a theory. 
C)  primarily to identify unstable equilibrium situations. 
D)  to make the theory more complicated 
E)  to distinguish economics from other disciplines.

Question 4

Economic models differ from those in the physical sciences because

Accepted Answer

A)  they are usually more difficult than models in the physical sciences. 
B)  economics has nothing to do with anything physical. 
C)  they are less difficult than those in the physical sciences. 
D)  they attempt to explain human behavior. 
E)  economics relies on controlled experiments. 
A)  they are usually more difficult than models in the physical sciences. 
B)  economics has nothing to do with anything physical. 
C)  they are less difficult than those in the physical sciences. 
D)  they attempt to explain human behavior. 
E)  economics relies on controlled experiments.

Question 5

A positive relationship represents a situation where an increase in one variable is associated with an increase in the other variable. Draw three graphs that represent a positive relationship.

Accepted Answer

The answer of A positive relationship represents a situation where...

Question 6

The ceteris paribus, or everything else held constant, assumption is used in economics primarily to identify unstable equilibrium situations.

Accepted Answer

A) True 
 B)False

Question 7

When economists explain the relationship between the price of hotdogs and the number that consumers will buy, the ceteris paribus assumption implies that

Accepted Answer

A)  the price of hotdogs is constant. 
B)  the quantity of hotdogs purchased is constant. 
C)  both the price and quantity of hotdogs purchased are constant. 
D)  factors other than the price and quantity of hotdogs purchased are constant. 
E)  everything in the world does not change. 
A)  the price of hotdogs is constant. 
B)  the quantity of hotdogs purchased is constant. 
C)  both the price and quantity of hotdogs purchased are constant. 
D)  factors other than the price and quantity of hotdogs purchased are constant. 
E)  everything in the world does not change.

Question 8

Economic models need to resemble, as much as possible, the phenomena being explained.

Accepted Answer

A) True 
 B)False

Question 9

It has been documented that beer consumption rises when the unemployment rate rises. To conclude that this correlation means that increased unemployment causes increased beer consumption is to mistake correlation for causality.

Accepted Answer

A) True 
 B)False

Question 10

To argue that economics is the only science not used objectively is

Accepted Answer

A)  true because only economics engages in politically controversial issues. 
B)  false because other sciences besides economics engage in politically controversial issues. 
C)  true because all other sciences use controlled experiments. 
D)  false because one's reasoning is either correct or incorrect. 
E)  false because none of the other sciences use controlled experiments. 
A)  true because only economics engages in politically controversial issues. 
B)  false because other sciences besides economics engage in politically controversial issues. 
C)  true because all other sciences use controlled experiments. 
D)  false because one's reasoning is either correct or incorrect. 
E)  false because none of the other sciences use controlled experiments.

Question 11

"Inflation is currently 2 percent in the United States." This statement is an example of

Accepted Answer

A)  a positive statement. 
B)  a normative statement. 
C)  the fallacy of composition. 
D)  macroeconomics. 
E)  microeconomics. 
A)  a positive statement. 
B)  a normative statement. 
C)  the fallacy of composition. 
D)  macroeconomics. 
E)  microeconomics.

Question 12

Economics requires more of a mixture of verbal and quantitative skills than other sciences.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 2A-4  
-The curve in Exhibit 2A-4 represents a(n)

Accepted Answer

A)  negative slope. 
B)  slope that is constant and positive. 
C)  slope that is not constant and positive. 
D)  inverse relationship. 
E)  slope that is constant. 
A)  negative slope. 
B)  slope that is constant and positive. 
C)  slope that is not constant and positive. 
D)  inverse relationship. 
E)  slope that is constant.

Question 14

Positive economics is the

Accepted Answer

A)  study of the desirable attributes of economic relationships. 
B)  scientific study of "what is" among economic relationships. 
C)  scientific study of how people behave positively. 
D)  study of how economic policy should improve the welfare of individuals. 
E)  study of how people and institutions should behave. 
A)  study of the desirable attributes of economic relationships. 
B)  scientific study of "what is" among economic relationships. 
C)  scientific study of how people behave positively. 
D)  study of how economic policy should improve the welfare of individuals. 
E)  study of how people and institutions should behave.

Question 15

A laissez faire system is an economy with many government regulations.

Accepted Answer

A) True 
 B)False

Question 16

Identify whether the following statements are positive or normative economic statements, and explain why you categorized them in that way.
 (A) "The best way to improve the econamic situation wauld be to decrease the unempldyment rate by decreasing the interest rate."
(B) "The guverment increased taxes in arter to decrease the budiet deficit and ingardve ecanamic grawth."
(C) "Tares an businesses decreased production in 5 ame industries in the shart run."
(D) "The gaverment should pursue a law-infletion policy by restraining the growth of the money suyply."

Accepted Answer

(A) Narmatre ecanamic statement expressi

Question 17

Graph the relationship between X and Y such that the relationship between X and Y is linear and positive.
 (B) Suppase there is a third variable, $Z$, that causes $Y$ to decrease (for any piven value of $X$ ) whenever $Z$ increases. Show what happens to the relationshp between $X$ and $Y$.

Accepted Answer

Line 1 in the figure below shows the lin

Question 18

Refer to the table below, which shows data for the United States.
 $$\begin{array} { | l | l | l | } 
\hline \text { Year } & \begin{array} { l } 
\text { Unempluyment } \
\text { Rhte (\%. }
\end{array} & \begin{array} { l } 
\text { Inflition Rate } \
\text { (4.) }
\end{array} \
\hline 2007 & 4.6 & 2.9 \
\hline 2008 & 5.8 & 3.8 \
\hline 2009 & 9.3 & - 0.3 \
\hline 2010 & 9.6 & 1.6 \
\hline 2011 & 8.9 & 3.1 \
\hline
\end{array}$$ (A) Constuct a thme-seres plat of the unemployment rate.
(B) Construct a tine-5eries plat of the infletion rate.
(C) Canstruct a scatter plat of the data. Is there any apparent carrelation between the inflation rate and the unemployment rate in these data?

Accepted Answer

(A) A thme-5eries plot of the unemployme

Question 19

An economic model is the same as a theory.

Accepted Answer

A) True 
 B)False

Question 20

Explain why there is the popular impression that economists seldom agree with each other.

Accepted Answer

First, even if 99 percent of the economi

The ceteris paribus assumption is always used whenever an economist analyzes the relationship of two variables.

Using gasoline prices as an example, explain what a normative statement is and what a positive statement is.

The ceteris paribus assumption is used in economics

Economic models differ from those in the physical sciences because

A positive relationship represents a situation where an increase in one variable is associated with an increase in the other variable. Draw three graphs that represent a positive relationship.

The ceteris paribus, or everything else held constant, assumption is used in economics primarily to identify unstable equilibrium situations.

When economists explain the relationship between the price of hotdogs and the number that consumers will buy, the ceteris paribus assumption implies that

Economic models need to resemble, as much as possible, the phenomena being explained.

It has been documented that beer consumption rises when the unemployment rate rises. To conclude that this correlation means that increased unemployment causes increased beer consumption is to mistake correlation for causality.

To argue that economics is the only science not used objectively is

"Inflation is currently 2 percent in the United States." This statement is an example of

Economics requires more of a mixture of verbal and quantitative skills than other sciences.

Exhibit 2A-4 -The curve in Exhibit 2A-4 represents a(n)

Positive economics is the

A laissez faire system is an economy with many government regulations.

Graph the relationship between X and Y such that the relationship between X and Y is linear and positive. (B) Suppase there is a third variable, $Z$ , that causes $Y$ to decrease (for any piven value of $X$ ) whenever $Z$ increases. Show what happens to the relationshp between $X$ and $Y$ .

An economic model is the same as a theory.

Explain why there is the popular impression that economists seldom agree with each other.

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth Around the World

International Trade

International Finance

Filters

Exam 2: Observing and Explaining the Economy

The ceteris paribus assumption is always used whenever an economist analyzes the relationship of two variables.

Using gasoline prices as an example, explain what a normative statement is and what a positive statement is.

The ceteris paribus assumption is used in economics

Economic models differ from those in the physical sciences because

A positive relationship represents a situation where an increase in one variable is associated with an increase in the other variable. Draw three graphs that represent a positive relationship.

The ceteris paribus, or everything else held constant, assumption is used in economics primarily to identify unstable equilibrium situations.

When economists explain the relationship between the price of hotdogs and the number that consumers will buy, the ceteris paribus assumption implies that

Economic models need to resemble, as much as possible, the phenomena being explained.

It has been documented that beer consumption rises when the unemployment rate rises. To conclude that this correlation means that increased unemployment causes increased beer consumption is to mistake correlation for causality.

To argue that economics is the only science not used objectively is

"Inflation is currently 2 percent in the United States." This statement is an example of

Economics requires more of a mixture of verbal and quantitative skills than other sciences.

Exhibit 2A-4 -The curve in Exhibit 2A-4 represents a(n)

Positive economics is the

A laissez faire system is an economy with many government regulations.

Graph the relationship between X and Y such that the relationship between X and Y is linear and positive. (B) Suppase there is a third variable, ZZZ , that causes YYY to decrease (for any piven value of XXX ) whenever ZZZ increases. Show what happens to the relationshp between XXX and YYY .

An economic model is the same as a theory.

Explain why there is the popular impression that economists seldom agree with each other.

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth Around the World

International Trade

International Finance

Filters

Graph the relationship between X and Y such that the relationship between X and Y is linear and positive. (B) Suppase there is a third variable, $Z$ , that causes $Y$ to decrease (for any piven value of $X$ ) whenever $Z$ increases. Show what happens to the relationshp between $X$ and $Y$ .